Ethics · 18% of the SAFE exammedium
Correct answer: Prohibited because an MLO cannot receive compensation from both the borrower and the lender on the same transaction
Under the LO Compensation Rule (Regulation Z, as amended by Dodd-Frank), an MLO is prohibited from receiving compensation from both the borrower and the lender on the same transaction — this is known as the dual compensation prohibition. The broker must choose: either be paid by the borrower (borrower-paid compensation) or by the lender (lender-paid compensation), but not both. Disclosure on the Loan Estimate does not make dual compensation permissible, and there is no written consent exception. The 2% threshold mentioned in "Prohibited only if the yield spread premium exceeds..." does not exist in this context.
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